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ROCHAK SAXENA B.COM HON.

II YEAR
INTRODUCTION

Ceat Ltd, a part of the RPG Goenka group, is the second largest tyre

manufacturer in the country after MRF. Ceat manufactures truck & bus,

passenger car, scooter and LCV tyres. The company is a dominant player in the

truck & bus and passenger car tyre segments with a market share of 14% and

17% respectively. In FY2000, Ceat did well to posting a 21%yoy sales growth in

the replacement market for truck & bus tyres. It is presently focusing on

catering to the fast growing passenger car and two-wheeler industry. Towards

this, it is commissioning a new radial tyre factory in June 2000.

Industry basics

Tyre industry is capital intensive and as capacities come in spurts, it leads to

constant demand-supply imbalances and consequent cyclicality in prices.

Variable cost is also very high, with raw materials forming nearly 70% of the

costs. Profit margins are therefore thin. Production process is technology

intensive and globally huge sums are invested in R&D. Tyre demand is a derived

demand, dependent on the auto industry, both for OEM and replacement

market. The major segments are Truck & Bus (T&B) tyres and car tyres. Value

share of T&B segment is about 73%. This segment is highly competitive and

margins are typically lower than in the car tyres segment. Replacement market

forms the largest segment (about 58%), followed by OEM (about 22%). Export

accounts for about 15%. With global demand slowing down, there is a

consolidation of capacities through mergers etc. The domestic tyre industry

broadly mirrors the market characteristics of the global industry. However, due
ROCHAK SAXENA B.COM HON. II YEAR

to rough road conditions, the more rugged, suitable and cheaper cross ply tyres

are in vogue. Consumption of natural rubber is, therefore, proportionately

igher. The government has decided to impose 10% safeguard duty on carbon

black and hiking benchmark prices of natural rubber (25-30% of sales) in

February 1999. Its impact was felt only to an extent as prices of these

commodities are ruling at historical lows in the global market.

Ceat is part of the RPG group, which is diversified, with presence in major

sectors like power, fertilizers, pharmaceuticals, tyres, computer, telecom,

financial services etc. The group stumbled trying to grow via diverse platforms

and has many companies that have turned sick. But lately the strategy seems

to be one of restructuring and consolidation. The group is divided into 4 broad

areas - rubber & allied products, power, electronics & telecom and chemicals.

Ceats investments in its subsidiaries have also come down this fiscal which is a

sign of prudence on the management.

BUSINESS DESCRIPTION

Ceat is a manufacturing company, which produces rubber, tire, nylon fabric

products, nylon tire yarn, glass fiber, automotive flaps, filament mats and other

rubber products for the automotive markets in India. The company has a well

established research and development center that evaluates the application

and development of new raw materials, compounds and tire sizes. It produces
ROCHAK SAXENA B.COM HON. II YEAR

tires for two and three wheeled vehicles, passenger cars, LCVs, trucks and

buses. Ceat exports to almost 50 countries, with the US being the largest

destination.

The company also provides investment financial services through Meteoric

Industrial Finance and Atlantic Holdings. Automotive tire sales account for

around 90% of revenues, automotive tubes account for about 8% and the

remaining revenues come from other non-core operations.

The company is pursuing a strategic initiative of intensifying outsourcing to

expand its product range and increase production volumes. Ceat has an

agreement with Pirelli of Italy for outsourcing radial tires which are being

marketed under the CEAT Spider Radials brand name.

CEAT INDIA

Ceat Limited is a manufacturer of tires in India. Automotive tires comprise the

largest part of the Company's revenue, however it also produces tire flaps,

rubber tubing and nylon thread. The Company also offers financial services

through Ceat Financial Services Limited, including hire purchase, office

equipment finance, container and equipment/infrastructure leasing and money

market operations.

COMPANY OVERVIEW

How the company grew from bottom to top


ROCHAK SAXENA B.COM HON. II YEAR

History

CEAT stands for Cavi Electrici Affini Torino (Electrical Cables and Allied Products

of Turin).

CEAT International was first established in 1924 at Turino in Italy and

manufactured cables for telephones and railways.

In 1958, CEAT came to India, and CEAT Tyres of India Ltd was established in

collaboration with the TATA Group.

In 1982, the RPG Group took over CEAT Tyres of India, and in 1990, renamed the

company CEAT Ltd. 5

CEATs PRODUCT RANGE

Truck radial tyre section

Industry basics

Tyre industry is capital intensive and as capacities come in spurts, it leads to

constant demand-supply imbalances and consequent cyclicality in prices.

Variable cost is also very high, with raw materials forming nearly 70% of the

costs. Profit margins are therefore thin. Production process is technology

intensive and globally huge sums are invested in R&D. Tyre demand is a derived

demand, dependent on the auto industry, both for OEM and replacement

market. The major segments are Truck & Bus (T&B) tyres and car tyres. Value

share of T&B segment is about 73%. This segment is highly competitive and
ROCHAK SAXENA B.COM HON. II YEAR

margins are typically lower than in the car tyres segment. Replacement market

forms the largest segment (about 58%), followed by OEM (about 22%). Export

accounts for about 15%. With global demand slowing down, there is a

consolidation of capacities through mergers etc. The domestic tyre industry

broadly mirrors the market characteristics of the global industry. However, due

to rough road conditions, the more rugged, suitable and cheaper cross ply tyres

are in vogue. Consumption of natural rubber is, therefore, proportionately

higher. The government has decided to impose 10% safeguard duty on carbon

black and hiking benchmark prices of natural rubber (25-30% of sales) in

February 1999. Its impact was felt only to an extent as prices of these

commodities are ruling at historical lows in the global market.

Ceat is part of the RPG group, which is diversified, with presence in major

sectors like power, fertilizers, pharmaceuticals, tyres, computer, telecom,

financial services etc. The group stumbled trying to grow via diverse platforms

and has many companies that have turned sick. But lately the

strategy seems to be one of restructuring and consolidation. The group is

divided into 4 broad areas - rubber & allied products, power, electronics &

telecom and chemicals. Ceats investments in its subsidiaries have also come

down this fiscal which is a sign of prudence on the management.


ROCHAK SAXENA B.COM HON. II YEAR

Indian Tyre Industry

The tyre industry has witnessed a CAGR of 8.3% over the last decade mainly

fuelled by the strong growth in the domestic auto industry. Though the

replacement market has driven the industry growth for long time, the OEM

market has seen a robust growth over the last couple of years.

The industry is highly capital intensive, as it requires around Rs4bn to setup a

radial tyre plant with a capacity of 1.5mn tyres and around Rs1.5-2bn for a

crossply tyre plant of a capacity to manufacture 1.5mn tyres.

The profitability of the industry has high correlation with the prices of key raw

materials such as rubber and crude oil as they account for more than 70% of

the total costs. The raw material to sales ratio in the industry is around 65%.

The industry is dominated by four players viz MRF, Apollo Tyres, JK Industries

and Ceat and enjoys more than 70% of the total market share.

The fortunes of the industry are linked to the trend in the domestic auto

industry, retreading, trend in road transportation and spending on road

infrastructure.
ROCHAK SAXENA B.COM HON. II YEAR

The companies have lined up further expansion plans to meet the increasing

demand.

India Infoline Sector Studies : Indian Tyre Industry is available in Acrobat Reader

(PDF) format. The Report provides exhaustive information on the Indian Tyre

Sector, the demand drivers, trends in the industry (with respect to production,

exports, market share), key characteristics of the Indian market and profile of

leading players in India.

11
ROCHAK SAXENA B.COM HON. II YEAR

ORGANISATIONAL BODY

Enjoy what you do, do your best and keep learning.

Mr. Anant Goenka

Managing Director

Mr. Anant Vardhan Goenka is an M.B.A from the Kellogg School of

Management and a B.SC in Economics from the Wharton School.

Mr. Goenka joined KEC International Limited (KEC) as Vice President

(Corporate) and was in charge of the telecom business, business

development in North America and Integrated planning and monitoring of

Transmission and Distribution Business. In recognition of his contribution

in the said business vertical, KEC elevated him to the position of Executive

Director Supply Chain in-charge of manufacturing, procurement,

planning, logistics and quality department in the company.

Prior to joining KEC, Mr. Goenka was also associated with CEAT Limited as

Head of Specialty Tyre Business. Earlier, Mr. Goenka has also worked with
ROCHAK SAXENA B.COM HON. II YEAR

Hindustan Unilever Limited, Accenture, Mumbai and Morgan Stanley,

Hong Kong. Mr. Goenka has a total work experience of 10 years.

13

Mr. Manoj Jaiswal

Chief Financial Officer

Chief Financial Officer CEAT Limited

"Manoj Jaiswal is the CFO for CEAT Limited. In addition to Finance, Manoj is also

responsible for Information Technology in CEAT and therefore driving both

Financial and Business Excellence. Before joining CEAT, Manoj had spent 17

years in Wipro in various capacity where he joined immediately after qualifying

his Chartered Accountancy and completing article-ship from Price Water House

Coopers. Amongst many roles in Wipro in 17 years Manoj was the CFO for BPO

business and thereafter he was heading Treasury and Investor Relations

Globally for Wipro. He has co-steered the BPO business to one of the fastest and

most profitable business in the BPO industry along-with the Business Head.

During his tenure as Head of Treasury and Investor Relations, Wipro underwent

a Demerger of its Non IT Business and Manoj was a key member in this

initiative.
ROCHAK SAXENA B.COM HON. II YEAR

Manoj is a Commerce Graduate and a Chartered Accountant. In his leisure time,

Manoj enjoys music, movies, running, cycling and photography"

15

Mr. Arnab Banerjee

Executive Director -

Operations

Mr. Arnab Banerjee is the Executive Director Operations for CEAT Limited. He

joined CEAT in the year 2005 as Vice President, Sales and Marketing. Under his

leadership, CEAT has seen innovations in the Marketing initiatives, Sales and

Distribution strategy and seamless Supply Chain processes over the last 10

years. He also oversees all the manufacturing plants of CEAT.

Prior to his joining CEAT, Mr. Banerjee has worked with Marico Limited and

Berger Paints Limited in the various sales and marketing domains. He has the

total experience of more than 28 years.


ROCHAK SAXENA B.COM HON. II YEAR

17

Mr. Tom Thomas

Executive Director -

Technology & Projects

BACHELOR OF RUBBER TECHNOLOGY AND ENGINEERING FROM UNIVERSITY OF

COCHIN AND HAS 40 YEARS OF EXPERIENCE IN TYRE INDUSTRY OF INDIA. HE

WAS ASSOCIATED WITH THE INTRODUCTION OF PASSENGER RADIAL

TECHNOLOGY IN INDIA BY J K TYRES IN 1977 AND WAS RESPONSIBLE TO SET UP

THE FIRST ALL STEEL TRUCK/BUS RADIAL FACILITY AT MYSORE IN 1999. HE HAS

HELD POSITIONS LIKE CHAIRMAN OF INDIAN TYRE TECHNICAL ADVISORY

COMMITTEE, MEMBER OF INDIAN RUBBER INSTITUTE, GOVERNING COUNCIL

MEMBER OF INDIAN RUBBER MANUFACTURERS RESEARCH ASSOCIATION,


ROCHAK SAXENA B.COM HON. II YEAR

MEMBER OF ACADEMIC COUNCIL OF UNIVERSITY OF COCHIN, GUEST FACULTY

OF VARIOUS COLLEGES.

HE SPENT 17 YEARS IN APOLLO TYRES, WAS THE LEADING MEMBER OF THE

TEAM WHO SET UP APOLLOS BARODA PLANT AND WAS HEADING THEIR R&D /

TECHNOLOGY DEPT.

19

Mr. Dilip Modak

Senior Vice President -

Manufacturing, CEAT LTD, Mumbai w.e.f 2nd May-2013

Professional Qualifications: -

Post Graduate Diploma in Business Administration (HR)

Graduation in Industrial Engineering

Profile Summary:

Currently leading the manufacturing of CEAT LTD with plants across four

locations - Mumbai, Nashik, Vadodara and RADO - Kochi. Also leading CoE

(Center of Excellence)- Manufacturing of RPG group companies.


ROCHAK SAXENA B.COM HON. II YEAR

30 years experience of handling Plant Operations, Sourcing & Supply

Chain Management, Total Quality Management, Human Resources and various

manufacturing/re-engineering projects.

Engaged with industry leaders like CUMMINS INDIA LIMITED AND

MAHINDRA & MAHINDRA LIMITED.

In depth exposure to new product development, developing suppliers as

business partners, HR issues at plant level and facilitate continuous

improvement in safety, quality, cost, delivery and productivity.

21

Mr. Chandrashekhar

Ajgaonkar

Senior Vice President -

Quality Based Management

Mr. Chandrasekhar Ajgaonkar is the Senior Vice President QBM CEAT and

Corporate Business Excellence Centre- RPG Group. He joined the RPG Group in

the year 2005 as Corporate Quality Head and from 2011 performng in dual role

of Head QBM CEAT and Corporate Business Excellence head. Under his

leadership, RPG Group and CEAT has successfully implemented Business

Excellence initiatives over the last 10 years.


ROCHAK SAXENA B.COM HON. II YEAR

At present ,Under his guidance & leadership CEAT has started its TQM Journey

and aming for international award by the year 2017. He also oversees the

initiatives of Centre of Excellence for RPG Group.

Prior to his joining RPG and CEAT, Mr. Chandrashekhar Ajgaonkar has worked

with Mahindra & Mahindra, Crompton Greaves Ltd, Eicher Tractors Ltd, and

Eicher Consultancy Services in operations and TQM domain. He has the total

experience of more than 28 years

23

Mr. Kumar Subbiah

Senior Vice President

Kumar Subbiah is the Senior Vice President Materials & Outsourcing for Ceat

Limited. He joined Ceat in Feb 2015 after spending little over 20 years with

Unilever & Hindustan Unilever where he handled various Finance & Commercial

roles in India and outside India.


ROCHAK SAXENA B.COM HON. II YEAR

Kumar is a B.Com Graduate from Loyola College, Chennai. He is also a

Chartered Accountant and a Cost Accountant with professional interests both in

Finance & Supply Chain.

He is fond of Macro Economics and Information Technology. In his free time, he

enjoys playing Flute, Photography and watching Bollywood movies & Basketball.

25

MARKETING STRATEGY

Boards okay Harrisons rubber division merger with Ceat

Our Bureau

MUMBAI, April 19

THE process of consolidating the rubber business of the Rs 6,700-crore RPG

Enterprises got under way with the boards of Ceat Ltd and Harrisons Malayalam

Ltd (HML) approving the scheme of arrangement involving the demerger of the

rubber division of HML and its transfer to Ceat.


ROCHAK SAXENA B.COM HON. II YEAR

The appointed date of the Scheme of Arrangement is fixed as October 1, 2002.

Under the demerger plan for HML, Ceat will issue 95,03,900 equity shares of Rs

10 each to HML and 36,91,081 equity shares of Rs 10 each to the shareholders

of HML in the ratio of one share for five equity shares held by these

shareholders.

The existing paid-up capital of HML will be reduced from Rs 18.45 crore to Rs

9.23 crore by reducing the paid-up value of each equity share of Rs 10 each to

Rs 5 each. Besides, Ceat's investment portfolio will be demerged and

transferred to Meteoric Industrial Finance Company (MIFL), one of Ceat's non-

banking financial subsidiaries.

Post this issue of shares, MIFL will cease to be a subsidiary of Ceat and an

application will be made to the Bombay Stock Exchange for listing the company.

27

The objective of this consolidation is to strengthen the rubber business by

creating backward integration for Ceat, an official press release said quoting Mr

Harsh Goenka, Chairman, RPG Enterprises.

"With the merger of HML's rubber division and the divestment of all its non-tyre

assets Ceat will be able to focus on its tyre business and also improve its option
ROCHAK SAXENA B.COM HON. II YEAR

for sourcing this important raw material for its tyre manufacturing activities and

bring about synergistic effects,'' RPG Enterprises said in the press release.

Ceat had earlier said that the merger of the rubber division of HML with itself

would improve the company's options for sourcing this important raw material

for its tyre manufacturing activities and bring about synergic effects.

HML's rubber division has a turnover of Rs 50 crore from a crop output of about

10,000 tonnes per annum, while Ceat's natural rubber consumption was

approximately 50,000 tonnes worth Rs 260 crore last year.

As regards HML, the demerger of the rubber division will help it to focus on its

core business area of tea. The financial restructuring would enable the business

to grow not only its tea business but also consider expansion into new

agriculture related food products, the Board of HML also gave its approval for a

scheme of amalgamation of its 100 per cent subsidiaries, Harrisons Agro

Products Ltd, Harrisons Rubber Products Ltd and Harrisons Malayalam Financial

Services Ltd with itself.

29

The valuers to the Scheme are SBI Capital Markets & KPMG and the advisors are

Lodha & Co.

The scheme is subject to the sanction of the courts and the National Company

Law Tribunal. Ceat, MIFL and HML and its subsidiaries will apply to the High
ROCHAK SAXENA B.COM HON. II YEAR

Courts for approval. Khaitan & Co has been appointed as advocates to the

scheme for this purpose.

Ceat Limited

AVAILABLE NOW! LABOR PRODUCTIVITY BENCHMARKS AND VERTICAL

GAP ANALYSIS ON Ceat Limited

Published today by ICON Group International, Ltd. Two of the most

comprehensive studies to date on labor productivity and vertical gap analysis

benchmarks for Ceat Limited (BOM).

The methodologist for this unique study is Philip Parker, Eli Lilly Chair Professor

of Innovation, Business and Society at INSEAD (Fontainebleau, France and

Singapore). According to Professor Parker, With the globalization of markets,

greater foreign competition, and the reduction of barriers to entry, it becomes

all the more important to benchmark a companys financial indicators on a

worldwide basis. World stock markets have recently witnessed a return to

fundamental financial analysis. The goal of the reports is to assist consultants,

financial managers, strategic planners, and corporate officers in gauging certain

indicators of Ceat Limiteds financial and human resource structure.

31

The report has benchmarked Ceat Limited against competing firms in the Tires

and Inner Tubes Manufacturing industry worldwidegoing beyond traditional


ROCHAK SAXENA B.COM HON. II YEAR

methods of company benchmarking. The results are two specialized reports: (1)

global financial benchmarks using common-size statement ratios (vertical

analysis), and (2) labor productivity and utilization measures collected across

borders.

Coverage

Two reports, financial ratios and labor productivity ratios, are available for Ceat

Limited. Each report reveals productivity and industry ranks for Ceat Limited in

the Tires and Inner Tubes Manufacturing industry. Reports for the following and

many other Tires and Inner Tubes Manufacturing companies are available now:

Bridgestone Corporation

Brisa Bridgestone Sabanci Lastik Sanayi ve Ticaret AS

Ceat Limited, Compagnie Financiere Michelin, Compagnie Generale des

Etablissements Michelin

Continental AG

Cooper Tire & Rubber Co

DMIB Berhad (Malaysia)

Dunlop Africa Limited

Feng Tay Enterprise Co Ltd

Goodyear (Thailand) Public Company Limited

33
Heung Ah Corp
Kenda Rubber Industrial Co., Ltd.
Kumho Industrial Company Limited
Marangoni S.p.A.
ROCHAK SAXENA B.COM HON. II YEAR

Nexen Tire
Pirelli S.p.A.
Sumitomo Rubber Industries Ltd.
The Goodyear Tire & Rubber Co
Toyo Tire & Rubber Co., Ltd.
Vredestein NV
Yokohama Rubber Company, Limited

The vertical analysis deals with questions like: How has Ceat Limiteds

asset structure varied compared to global benchmarks for the Tires and

Inner Tubes Manufacturing industry? Does it generally hold more cash and

other short-term assets, or does it tend to concentrate its assets in

physical plant and equipment? On the liability side, does Ceat Limited

typically have a higher percent of payables compared to the benchmarks,

or does it hold a higher concentration of long-term debt? Does Ceat

Limited have a relatively higher cost of goods sold, operating costs, or

income taxes compared to global benchmarks? Have Ceat Limiteds

returns on equity been higher or its profit margins greater?

While the labor productivity analysis answers the following: What has

been the ratio of short-term and long-term assets to employee? What are

typical capital-labor ratios? What are the average sales and net profits per

employee compared to global benchmarks?


ROCHAK SAXENA B.COM HON. II YEAR

35

Professor Parker notes, "We are intrigued by the wide variations in

basic financial and productivity measures between Ceat Limited and

other Tires and Inner Tubes Manufacturing companies. The Earnings

Before Interest And Taxes (EBIT), for example, varied from -2.1 to

64.21. We see this type of variation in the hundreds of ratios that we

estimate.
LIMITATION OF THE RESEARCH

This report is for information purposes only and does not construe to be any

investment, legal or taxation advice. It is not intended as an offer or solicitation

for the purchase and sale of any financial instrument. Any action taken by you

on the basis of the information contained herein is your responsibility alone and

India Infoline Ltd (hereinafter referred as IIL) and its subsidiaries or its

employees or directors, associates will not be liable in any manner for the

consequences of such action taken by you. We have exercised due diligence in

checking the correctness and authenticity of the information contained herein,

but do not represent that it is accurate or complete. IIL or any of its subsidiaries

or associates or employees shall not be in any way responsible for any loss or

damage that may arise to any person from any inadvertent error in the

information contained in this publication. The recipients of this report should


ROCHAK SAXENA B.COM HON. II YEAR

rely on their own investigations. IIL and/or its subsidiaries and/or directors,

employees or associates may have interests or positions, financial or otherwise.

37

DATA COLLECTION

The present study contemplated an exploratory research.

Secondary data: secondary data which is already available and

published .it could be internal and external source of data.

Internal source: which originates from the specific field or area where

research is carried out e.g. publish brouchers, official reports etc.

External source: which originates outside the field of study like books,

periodicals ,journals, newspapers and the internet.

Ceat Limited. The Group's principal activities are to manufacture and

distribute automotive tyres, tubes and flaps. The products include nylon

fabric, nylon tyre yarn, glass fibre, automotive flaps, filament mats and

other rubber products. The Group also provides investment financial

services. The Group supplies to over 50 countries with the major business

links in the United States of

DATA PRESENTATION AND ANALYSIS


ROCHAK SAXENA B.COM HON. II YEAR

This Report features up to a ten-year record of the equity Price history for

Ceat Limited. Tabular results include the High, Low and Closing price for

the quarter. There is also a calculation of percentage change in price for

both Quarterly and Annual periods. Price values America, Singapore, the

United Arab Emirates, Bangladesh, Philippines, Afghanistan, and Nigeria

and other Asian, Middle East and African countries.

39

Layout and Content of a Typical Report


ROCHAK SAXENA B.COM HON. II YEAR

41

Tyre Industry April 2004 update


ROCHAK SAXENA B.COM HON. II YEAR

The tyre production in India witnessed a growth of 29.8% on a yoy basis in the

month of April 04. The most significant growth was seen in the production of the

passenger car segment, which saw a jump of 59% to 936,853 in April 2004 as

against 588,238 in April 2003. Other significant segments were the motorcycle

segment and the tractor segment. The motorcycle segment witnessed a growth

of more than 29% and the tractor segment (Front, Rear and Trailer) registered a

growth of more than 25%.

The contribution of the tyre and bus segment to the total production in

April 2004 reduced to 18.8% from 21.6% in April 2003. The passenger car

segment, which contributed 16.3% in April 2003, increased its share in

total production to 20%. The share of the tractor segment decreased from

5.1% to 4.9% for the same period.

If any indication from these figures have to be taken, the growth in the

passenger segment would be more than that in the commercial vehicle

segment in the near future. In the recent past, there has been an

ostensible shift in the demand of two wheelers from scooters to

motorcycles. The figures for the production of tyres in the respective

segment envisage the scenario to continue in the near term. Above

average pre-monsoon showers are expected to give positive triggers to

the demand of tractors. Increasing production of tractor tyres is an

indicator for the same.


ROCHAK SAXENA B.COM HON. II YEAR

Exports of tyres grew by a substantial 39.6% in April 2004 to 291,409

from 208,710 in April 2003.

43

The major contributors to this growth were the passenger car and the

scooter segments by registering a growth of 200% and 293%. During

FY04, exports contributed to the tune of 20.6% and 6% to total production

of tyres in truck & bus and passenger car segments respectively.


Business Description: Ceat Limited. The Group's principal activities are to

manufacture and distribute automotive tyres, tubes and flaps. The products

include nylon fabric, nylon tyre yarn, glass fibre, automotive flaps, filament

mats and other rubber products. The Group also provides investment

financial services. The Group supplies to over 50 countries with the major

business links in the United States of America, Singapore, the United Arab

Emirates, Bangladesh, Philippines, Afghanistan, and Nigeria and other

Asian, Middle East and African countries.


Exporting technologically advanced products

From five world-class plants, three in India and one in Sri Lanka, we

manufacture a wide range of tyres for all user segments including trucks,

buses, and LCVs. We also export farm, industrial, grader, OTR, car, scooter,

auto-rickshaw, motorcycle and passenger car radials.

Enjoying large market shares


ROCHAK SAXENA B.COM HON. II YEAR

Our individual market shares include 64% in Singapore, 22% in UAE and

22% in Philippines. We also send our products into USA, Bangladesh,

Pakistan, Vietnam, Iran, Nigeria, Egypt and other African, Middle-East and

Far-East Asian countries.

45

Meeting global standards

With our manufacturing processes being globally approved by DOT

(Department of

Business

Ceat is the second largest tyre manufacturer in the country. In FY2000, it

produced 5.72mn number of tyres as compared to 5.24mn units in FY99, a rise

of 9%yoy.

Tyres

Ceat manufactures truck & bus, passenger car, scooter and LCV tyres. Ceat has

an extensive distribution network of more than 3,000 dealers. Though known for

its quality and successful brands such as Formula I, Endura, Secura, Samrat,

Maestro, Stamina etc, market aggressiveness has been much lower than
ROCHAK SAXENA B.COM HON. II YEAR

competitors like MRF or Apollo. During the year, Ceat posted a rise of 21%yoy in

truck tyre sales in the replacement market in value terms. This was made

possible by the 22%yoy increase in the production of truck tyres. In FY2000,

sales of tyres contributed to 90.3% to the total turnover. During the year, the

company has launched new products under the brand names Fleet Master,

Turbo Lug and Elevata.

Tubes and flaps

The company does not have any production facility for manufacturing of tubes

and flaps. It sources the products from other manufacturing units. In FY2000,

sales of tubes and flaps contributed to

47

9.6% of total turnover. It sold 5.03mn tubes as compared to 4.47mn in FY99 and

1.34mn flaps as compared to 1.15mn in FY99.

Exports

Ceat is the second largest tyre exporter after J K Industries. Export sales on a

FOB basis has fallen by 9.5%yoy from Rs1.2bn in FY99 to Rs1.08bn in FY2000.

Export sales were hampered by a demand decline in the US market.

Its Sri Lankan venture Associated Ceat Pvt Ltd has a 55% share of the Sri

Lankan market. In November 1998, the company tied up with a local firm, Kelani

Tyres Ltd. This merger would have combined production capacity of 34 metric
ROCHAK SAXENA B.COM HON. II YEAR

tons. The turnover of the JV grew from Sri Lanka Rs1.29bn in FY99 to SL

Rs1.36bn in FY2000. Profit before tax rose 28%yoy to SL Rs75mn.

Expansion plans

The company has planned a capex of Rs1bn spread over the FY2000 and FY01.

While Rs400mn will be spent on capacity upgradations, Rs600mn will be utilized

for a new radial facility at its Nashik plant, which as part of the first phase will

start commercial production in June 2000. A greenfield project is likely to be set

up in the second phase. The company had taken over Rado Tyres in Kerala in

FY98 and plans to increase its manufacturing capacity from 15,000 to 40,000 in

the first phase and 70,000 in the next phase.

49

Outlook

Ceats fortunes are now (post restructuring) entirely linked to the tyre industrys

fortunes. As a leading player in the commercial vehicle, passenger car market

and two-wheeler tyre segments, it is expected that the company would take

advantage of the continuing growth in these segments. The new radial tyre

plant coming up in Nashik would help the company find a foothold in the fast

growing segment. Even in the export market, the company is reducing its

dependence on standard bias-ply products and concentrating on niches. The

company has done well by rationalizing its debt portfolio by replacing short-
ROCHAK SAXENA B.COM HON. II YEAR

term loans with long term financing from FIs. This has brought down interest

costs as has been witnessed in FY2000. However, with sale of investments in its

many subsidiaries, Ceat can no longer prop its operational income with other

income. Moreover, operating margin will be affected by the rise in prices of raw

material inputs. With augmented capacities for car radial tyres and two/three

wheeler tyres and initiatives in the field of supply chain management and

controlling costs, Ceat is expected to do reasonably well for the rest of the

fiscal.

Demand determinants

Growth of automobile industry will increase vehicle population and

thereby the demand for tyres in the OEM as well as the replacement

markets.

Relative importance of road transport and long distance travel by road

leading to increased need to replace tyres.

51

Earning drivers

Raw material price fluctuations: Prices of natural rubber, an agricultural

commodity. Other raw materials are mainly petrochemical based and

movements are cyclical.


ROCHAK SAXENA B.COM HON. II YEAR

Freeing imports of radial tyres will affect margins in that segment.

Ceat Tyres targets 14 per cent growth

MUMBAI, Sept 15 (PTI) R P Goenka controlled Ceat Ltd has set a sales

target of around Rs 1400 crore for the current year while the profits of the

company are expected to increase by 14 per cent over last year.

In the first five months of the current fiscal, the company has recorded

sales of Rs 533 crore which is 19 per cent more than the corresponding

period last year, Vice-Chairman Harsh Goenka told shareholders at its

40th AGM here today.

In order to emerge as a market leader, the companys management has set a

growth target of 14 per cent against a projected industry growth of 6 per cent,

he said.

The company intends at least a one per cent growth in market shares in all the

segments it operates in, Goenka said. At present, in scooter tyres it has a

market share of 21 per cent, motorcycles 11 per cent and car tyres 19 per cent.

53

Ceats exports last year dipped to Rs 128 crore from the previous years Rs 153

crore chiefly due to the South Asian crisis and lack of demand from the US and

Latin American countries.


ROCHAK SAXENA B.COM HON. II YEAR

Essel Packaging: The Board of Directors of Essel Packaging Limited yesterday

announced payment of a special millennium dividend of 150 per cent to its

equity shareholders.

Results (FY2001)

Company Results

Scrip Code : 500878 Company Name : CEAT LTD

Type Audited Audited UnAudited Audited

Date Begin 01 Apr 04 01 Apr 03 01 Apr 02 01 Apr 01

Date End 31 Mar 05 31 Mar 04 31 Mar 03 31 Mar 02

Description

Gross Sales 17803.1 16479.5 14882.7 13613.7

Excise Duty -2523.2 -2471.2 -2750.5 -2474.7

Net Sales 15279.9 14008.3 12132.2 11139

Other Income 389.8 1222.2 275.4 234

Total Income 15669.7 15230.5 12407.6 11373

55

Expenditure -14884.4 -13817 -11417.3 -10576.7


ROCHAK SAXENA B.COM HON. II YEAR

Operating Profit 785.3 1413.5 990.3 796.3

Interest -641.9 -764.1 -478.8 -572.7

Gross Profit 143.4 649.4 511.5 223.6

Depreciation -220.6 -221 -218.4 -188.4

Profit before Tax -77.2 428.4 293.1 35.2

Tax 10 -81.6 -109 -11.2

Profit after Tax -67.2 346.8 184.1 24

Extraordinary Items 48.5 -206.2 - -

Net Profit -18.7 140.6 184.1 24

Equity Capital 351 350.9 350.9 -

Reserves 2618.1 2993.4 2932.3 -

EPS -0.53 4.01 5.24 0.68

Nos. of Shares - Non Promoters 20473118 20473118 20473318 -

Percent of Shares - Non Promoters 58.14 58.14 58.14 -

57

Result Type A A A A
ROCHAK SAXENA B.COM HON. II YEAR

Notes

ln a significant move, the Rs.1,500-crore Ceat Ltd has tied up with leading portal

Yahoo India as part of its online marketing strategy. With this tie-up the

company plans to roll out a host of online promotions and Internet ads in a bid

to connect with the youth segment. In fact shedding its fuddy buddy image,

Ceat Ltd. id now exploring new mediums to create a contact point with its

consumers.

As for Ceat's tie-ups with other portals, says Ceat Ltd vice-president (marketing)

Kalyan Paul: "We are in talks with other portals but it's too early to talk about it

now. Incidently, the company has an online presence with a Website for its

sports property Ceat Cricket Ratings. Adds Mr. Paul: This property is now being

made more accessible to cricket fans by promotion through tie-ups with portals

such as Yahoo India. Clearly, the company is now stepping up its online

marketing plans to woo the youth segment.

Cashing in on the growing popularity of Short Messaging Service (SMS) also

plans to enter this alternative medium to touch base with its target audience.

In addition to the Net, we are evaluating all formats which will help us connect

with the youth- SMS included, informs Mr. Paul.As Indian corporates are

increasingly opting for new media tools to connect with the youth segment, why

has Ceat Ltd. opted for this mode of marketing now?

59
ROCHAK SAXENA B.COM HON. II YEAR

"Since, there is a lot of synergy between two-wheeler owners and the Net

audience, the company is planning to use Internet as a medium. A plan is being

put into place to use this interactive medium to build the Ceat brand among the

youth, who are todays consumers for two-wheeler tyres and future ones for car

tyres, he adds.

To meet the objective, the company is now using tools such as e-mail

newsletters which give tyre users an opportunity to understand the brand

better.

So with these new online initiatives, is the company going for a totally new

brand image? According to Mr. Paul, the Ceat brand is strong among the target

audience and the company is not looking at changing the brand equity or

positioning. The existing brand plank Born Tough has universal and timeless

appeal, with a young and with-it audience.

"We intend to create a relationship with new users (youth) to create a market

for the future by catching consumers at the beginning of their purchase life-

cycle and maintaining a relationship based on the delivery of superior value,

he reasons.

As for the future of online marketing in India, Mr. Paul observes that in today's

dynamic media environment, online tools are enabling marketers to target their

messages more effectively to the relevant audience.


ROCHAK SAXENA B.COM HON. II YEAR

61

COMPETITORS

India is a manufacturer, expor-ter and importer of Off-The-Road (OTR) tyres.

CEAT, MRF, Goodyear, Balkrishna Tyres, Vikrant Tyres and TVS are the major

manufacturers of OTR tyres in the country. OTR tyres account for 11 per cent of

the country's total tyre market which is estimated at Rs 12,500 crore. Large-

sized OTR tyres are imported, as their demand volume is low and it makes more

economic sense to import. Also, OTR radials are not manufactured here and

they are also imported. Bridgestone, Yokohama, Michellin and Pirelli are the

MNCs supplying bigger OTR tyres in this country. Similarly, India also exports

OTR tyres to other countries including Europe and America.

OTR tyres, in India, have gained the limelight because of the government's

massive expenditure programme in infrastructure building, especially in road

construction. In fact, the government's Golden Quadrilateral project has given a

new lease of life to this otherwise sinking industry. Till 2000-01, the industry's

production was almost stagnant at around 36,000-37,000 tyres; in 2002-03, the

production of tyres crossed 50,000 numbers. And this year its performance is

expected to be even better. Industry sources claim that production of OTR tyres

should touch 72,000 during 2003-04, a growth of 44 per cent. During the first 9

months of the current year, the industry has achieved a growth of 48 per cent.

says Tom K. Thomas, Vice President (Technical), Ceat Ltd, "Growth in OTR tyres
ROCHAK SAXENA B.COM HON. II YEAR

was insignificant a few years ago. But the NHDP project has increased the

demand for these tyres. During the next few years the demand for OTRs should

grow at the rate of around 20 per cent every year."

63

Despite this the mining industry remains the main customer of OTR tyres in the

country. "Nearly 65 per cent of the demand for OTRs comes from Coal India

Ltd," says N. Ganesh, Chief Manager (R&D), Ceat Ltd. BEML and Caterpillar are

the other major customers of the industry. In the foreseeable future the mining

sector is expected to remain a major customer for OTR tyres.

An important feature of the OTR tyres industry is that majority of the production

(nearly 67 per cent) is exported. Last year exports saw a substantial jump of 56

per cent. The industry exported 33,530 tyres during 2002-03 as against 21,468

in the previous year. One of the main reasons for the industry's over

dependence on exports for its survival is the low domestic demand. Once the

domestic demand picks up growth in exports is expected to come down. And

this year the industry is expected to export 36,200 tyres, which is 50 per cent of

the domestic production. However, the OTR tyres industry is facing some

serious problems. The main cause of worry is rising raw material prices, mainly

natural rubber and petrochemical based raw materials. India is the third largest

producer and fourth largest consumer of natural rubber, and fifth largest

consumer of natural rubber and synthetic rubber together in the world. Natural

rubber accounts for nearly 26 per cent of the raw material cost of the industry.

Says Tom K. Thomas, "Rising price of natural rubber has affected our margins
ROCHAK SAXENA B.COM HON. II YEAR

badly. Whatever China consumes, the price of the same goes up, and whatever

China produces the price of the same goes down. Banning exports is not a

solution. We may have to increase the price of OTRs, as we are planning to do in

the near future."

Technologically, the Indian OTR tyres industry is a step behind the developed

nations. OTR radials are not yet manufactured in India. Nor do the major players

have any plans to manufacture the same in the near future. But OTR radials

have certain advantages over traditional tyres.

65

The life of OTR radials is longer than that of traditional tyres by more than 60

per cent. Also, OTR radials result in saving in consumption of fuels. OTR radials

also provide comfort to the driver thereby reducing fatigue. Industry experts

foresee good growth potential for the industry in the coming years, both in the

domestic market and export market. OTR tyre manufacturing is a labour

intensive operation and as a result its production abroad is on the decline. This

gives India good scope to expand its market abroad. Also, in the domestic

market, there is expected to be more demand for Grader and Compactor tyres

because of enhanced road construction activity in the country. "Import of tyres

from China has just started. It may pose a threat in the coming days. Quality of

the tyres is suspect but they are cheaper," Tom K. Thomas of Ceat avers. In the

coming days retreading of OTR tyres could become big business. At present, it

is dominated by a handful of players in the country. Considering its potential


ROCHAK SAXENA B.COM HON. II YEAR

many players may take the plunge in the retreading business. Manufacturers

may employ higher productivity building machines like orbitread technology for

quality enhancement. Besides, the country may start producing bigger size

tyres which were hitherto imported.

67

RESULTS AND DISCUSSIONS

Industry Overview:

During the year under review, the Tyre Industry grew by 7% in value and

approximately 9% in volume. This clearly reflects the prevailing excess capacity

situation.

The Tyre Industry continues to bear the brunt of increasing raw material

costs. Rubber imports are still controlled, resulting in high prices.

Additionally, the prices of synthetic rubber and rubber chemicals have risen

steeply in international markets. There has also been 2% increase in excise


ROCHAK SAXENA B.COM HON. II YEAR

duty, effected by the Union Budget announced in February, 2000 on all tyres,

except two wheeler and farm rear types.

Thus, while there are valid reasons for a commensurate increase in prices,

the intense competition has prevented this from happening. Margins,

therefore, are under pressure.

3. CEAT'S Performance:

The year 1999-2000 saw CEAT move out of the consolidation phase and

surge ahead with increased visibility in the market place.

Significant product quality improvements, innovative marketing strategies, a

unique supply chain management model, cost optimisation measures, and a

committed work force, all saw the Company emerge stronger inspite of this it

is the best company ever.

69

4. Manufacturing:

The capacity optimisation projects at the Mumbai and Nasik Plants are

progressing on schedule. The new radial tyre facility coming up at Nasik is

expected to be completed on time with manufacturing commencing in May-

June 2000.
ROCHAK SAXENA B.COM HON. II YEAR

The Off-take Agreement for radials and two and three wheeler tyres with

erstwhile joint venture partner, Goodyear, expires in August 2000. This may

be extended for a further period.

The expansion plan at CEAT's associated company, Rado Tyres Ltd, located in

Kerala, has been implemented. This will enhance the conversion capacity of

two and three wheeler tyres to 70000 tyres per month.

The Indian tyre industry caters to all segments of the market i.e.

OEM

Replacement

STU

Defence

Exports

The total size of domestic market (4 wheeler tyres) can be estimated around

19.4mn tyres/annum for the FY03 and is expected to go up to 28.4mn

tyres/annum by FY08. In addition, the tyre industry exports Rs13bn of tyres

across 6 continents and over 60 countries.


ROCHAK SAXENA B.COM HON. II YEAR

71

What is the USP of the Company?

Continuous innovation and state of the art technology backed by quality is

the mantra of success at JK Tyre and this has given us a clear competitive

edge over our competitors.

JK Tyre, Pioneered the Radial revolution in India two decades ago and ever

since then we have been riding the technology ladder. We offer the entire

range of 4 wheeler radials i.e. Truck & Bus, LCV, Car, Jeep and Farm. We

launched Indias first eco-friendly range of colored radials and are set to

drive the second green revolution with the launch of the tractor radial.

Globally radialization in the truck and bus segment is over 60%. Envisioning

the need for products to cater to changing freight & passenger movement

patters on superior vehicles running on the fast improving road

infrastructure, JK Tyre pioneered the introduction of truck and bus all steel

Radial tyres in India for the first time. The company has deployed significant

resources in the developing the market and educating the customer on the

value proposition of truck and bus radial tyres. Backed by an all India service

network along the national highways, JK Tyre is all set to drive yet another

radial revolution in the country.

Hari Shankar Singhania Elastomer and Tyre Research Institute (HASETRI) is

our in-house R&D center and is one of its kind in Asia. Today HASETRI act as
ROCHAK SAXENA B.COM HON. II YEAR

a nerve center - understand/determine consumer needs, develop and

provide suitable products of world-class quality to the Indian consumer as

well as continuously gauge their performance. This facility is involved in

various collaboration projects with leading research agencies both in India

and abroad. HASETRI is presently engaged in FEA and NDT studies with IIT

Chennai, Elastomer studies with IIT Kharagpur and partnering IIT Delhi in the

study of textiles.

73

Who are other major players in the tyre Industry, apart from JK

Tyres? What is the share of your company in the total market share?

Apart from JK Tyre, MRF, Bridgestone, Apollo & Ceat can be categorized as other

dominant players in Indian Tyre industry, others being Goodyear and Birla. Put

together they represent around 75-80% of the Indian tyre industry.

JK Tyre V/s Competition Shares of Total 4 Wheeler Tyres

Company Share Company Share

JK Tyre 20.9% Ceat 15.9

MRF 22.3% Goodyear 9.5%

Apollo 17.4% Birla 5.6%

Bridgestone 8.5%
ROCHAK SAXENA B.COM HON. II YEAR

Source: ATMA (All 4 Wheeler Tyres) 2002-03 April - March

Who are the major user-segments and what is Companys market

share in each user segment. (CVs, Car &Utility Vehicles and Farm & 2-

3 wheelers)?

One can categorize the major user segments in 4 wheeler tyres as Commercial

Segment i.e Truck, Bus and LCV, Passenger Car Segment i.e Cars, MUVs,

Jeep and Farm Segment i.e. Tractor and ADV.

JK Tyre V/s First Top 3 Players Share Truck & Bus Segment

JK Tyre Apollo MRF

25.2% 24.8% 18.8%

Source: ATMA (All 4 Wheeler Tyres) 2002-03 April - March

JK Tyre V/s First Top 3 Players Share Passenger Line Segment

75

Source: ATMA (All 4 Wheeler Tyres) 2002-03 April - March

In terms of revenues, which segment is performing better? Which

segment is likely to drive the growth of Tyre Industry?


ROCHAK SAXENA B.COM HON. II YEAR

In term of revenue Truck and Bus segment contributes the maximum around

70%.

Further according to me, growth in commercial vehicle & passenger car

segment, production and sales, will boost up the demand and thereby continue

to drive the growth of tyre industry.

The infrastructure initiatives like Golden Quadrilateral and NE-SW corridor,

expressways will further drive the Radial revolution in India, be it Truck & Bus

Radial or Passenger car radials.

For JK Tyre the world is the stage, accordingly, it has forged long term business

partnerships with overseas players. We have established a significant presence

in China by way of outsourcing arrangements as well as participation on

manufacturing as technology partners. Today heavy-duty bias tyres are

manufactured with our Technology and JK Tyre Branding and are being

successfully marketed in the Chinese and other global markets.

Today, we export tyres to 60 countries across 6 continents and enjoy premium

brand status in highly competitive markets like the US. For being the largest

exporter of tyres from the country, JK Tyre has been awarded with Top Export

Award CAPEXIL in year FY03. We have generated revenue of Rs3.1bn (FY03)

from our export operations.


ROCHAK SAXENA B.COM HON. II YEAR

The turnover from Chinese operations will be of significant contribution in the

years to come. We expect to have an estimated turnover of around Rs4bn in

next few years.

77

What top line and bottom line growth figures are you expecting for the

coming years?

We at JK Tyre are looking for a turnover in excess of Rs50bn by FY06 and

expected to improve our bottom-line substantially in the years to come. We

aim, to be leaders in the entire range of radial tyres (Truck & Bus, LCV,

Passenger Car, Jeep & Tractor), we operate in.

Could you brief us about merger with Vikrant Tyres and synergy seen

in terms of change in capital structure, production capacity, sales and

realizations per unit?

JK Industries Ltd has metamorphosed into a mega tyre entity with the merger of

Vikrant Tyres Ltd and crossed the magic turnover figure of Rs20bn in FY03. We

are on the threshold of a new era with JK Tyre consolidating leadership status as

well embarking on the path of enhancing our global presence.

Derived Benefits
ROCHAK SAXENA B.COM HON. II YEAR

Benefits of synergy of over Rs220mn/annum accruing to one entity, JK

Industries, earlier it was shared by shareholders of respective companies.

The benefits have been realized in the areas of bulk raw material

purchases, logistics and rationalization of network & sales force.

Combined capacity of tyre stands increased from 3.5mn tyres/annum to

5.6mn tyres/annum.

The capital of the company stands revised from Rs345.6mn to Rs374.6mn

as on September30, 2003.

Earning Per Share of the restructured entity has substantially increased

and the market price of the share, which was Rs20-25 per share before

the restructuring, is now being traded at significantly higher prices of over

Rs75/share.

79

Technology & R&D

Full Range of products

Focused and targeted marketed segmentation

Common strengths of both the brands to be leveraged


ROCHAK SAXENA B.COM HON. II YEAR

Can you brief us about your regional presence? What are the

Companys plans in order to expand and maximize its geographical

reach?

Today we are exporting to 60 countries across 6 continents. We have a

significant presence in Middle East and a strong presence is South-East

Asia, including China, where in we have strategic alliances for both

outsourcing as well as sale of JK Branded tyres in Chinese markets.

W.r.t. expanding and maximizing our geographical reach, though, we are

the largest exporter from India into Americas & Australia, we are in the

process of further developing these markets to cater to the still untapped

potential.

Anything which you like to share with us?

JK Tyre is the first to introduce Truck & Bus Radials in India

is 6 years ahead of the next likely entrant

Selling 0.2mn tyres per annum

Exporting Truck Radial Tyres worth Rs1bn

81

FUTURE SCOPE OF CEAT TYRES


ROCHAK SAXENA B.COM HON. II YEAR

Demand for tyres is derived from demand for automobiles. Therefore it is a

derived demand product and its fortunes are very closely linked to those of the

auto segment. Within the tyre industry the trucks and buses (T&B) segment

accounts for more than 70% of sales. Though scooters and motorcycle tyre

demand also plays a vital role, in value terms, CVs gain significance.

Tyre varieties can be divided into two categories cross ply and radial. The

domestic industry is dominated by cross-ply tyres, due to the poor conditions of

roads in the country and overloading of CVs. This is also the reason why

penetration of radial tyres in the CV segment is negligible and finds presence

only in the passenger car segment. On the other hand, radial tyres dominate

western markets. Radial tyres can be differentiated on the type of belt used

fiberglass, steel and nylon. Worldwide, steel belted radials are more popular due

to their performance advantage.

There are three major consumer segments for tyres namely replacement

segment, Original Equipment Manufacturers (OEMs) and exports. Though

fortunes of the sector are closely tied with the automobile industry, replacement

demand continues to remain the key growth driver. Replacement demand

accounts for as high as 57% of industry volumes. However, the contribution

from OEM and replacement segments varies across sub-segments in the auto

sector. For instance, for the passenger car segment, demand is balanced from

replacement and OEM categories i.e. 50:50.


ROCHAK SAXENA B.COM HON. II YEAR

83

Another key transition that is taking place in the industry is the entry of

multinationals like Good Year, Bridgestone and Michelin in the domestic market.

MNC tyre makers have cornered a higher market share in India in the last three

years due to their international relationships apart from superior technology.

Since Honda, Hyundai and Toyota have an international sourcing agreement

with Bridgestone, it is also the preferred supplier in India. Goodyear is believed

to be the preferred supplier for Ford India.

An extensive distribution network and strong brand recall are factors critical to

tyre sales. Brand building is given a lot of importance by manufacturers, who

allot 2-3% of sales to advertising. With the introduction of radial tyres, even

technology has assumed significance. All foreign cars introduced in the country

are on radial tyres.

Raw materials constitute 60%-70% of production cost of tyres. Natural rubber

and Nylon cord fabrics are the most critical raw materials as it accounts for 50%

of it..

NEW LAUNCHES OF CEAT TYRES

CEAT slashes prices of truck, bus tyres

CEAT-Kelani Associated Holdings (Pvt) Ltd., the leading tyre manufacturer in Sri

Lanka has announced a major reduction in the retail prices of lighttruck, truck

and bus tyres.


ROCHAK SAXENA B.COM HON. II YEAR

"Effective December 10, 2001 this reduction would make CEAT the most

affordable tyre when compared to all international brands sold in the local

market, the company's General Manager (Sales & Marketing) Ashwin Padukone

said.

85

"In a market battered by the economic downturn, the ability of the customer to

buy new tyres at the correct time has dwindled. As a result many vehicles are

seen on the road with bald tyres, which seriously jeopardises the safety of the

customers and their vehicles." Mr. Padukone said - "Using new tyres on the front

wheel, has been established as the safest and the recommended option for

safety reasons. We anticipate that this price reduction will encourage

consumers to replace with new tyres at the right time," he said.

The anticipated benefit of the increase in offtake and the consequent capacity

utilization, has been factored into the price reduction and has been passed onto

the consumers, Mr. Padukone added. CEAT-Kelani Associated Holdings (Pvt) Ltd.,

a joint venture company established in 1999, represents the strategic alliance

between Kelani Tyres Ltd., AMW Group, NDB and CEAT Ltd. of India. The holding

company has two manufacturing arms, one in Kalutara and the other at

Kelaniya.

COLLABORATIONS

A high percentage of fibre glass produced in the world is used for re

inforcement of plastics The main products maiketed by the fibre glass plants are
ROCHAK SAXENA B.COM HON. II YEAR

Mats, Rovings, Woven Rovings, Yarns etc. The use of end products i.e. fibre glass

reinforced plastics are mostly in pipes and tanks, boats transport sector,

furniture, crash helmets etc The formulation chosen for continuous fibre glass

production is generally known as E-glass. This has become standard the world

over as it performs well in practice and is used widely. The fibre glass produced

in India is Eglass only. The process of manufacture of fibre glass consists of

several steps e.g. batch preparation, production of glass melt, glass filament

conditioning, winding, drying of glass cakes, conversion to saleable products.

87
ROCHAK SAXENA B.COM HON. II YEAR

Strengths
Weaknesses

Right products, quality and

reliability.
Not very popular in the
Superior product performance
international market
vs. competitors.
Delivery-staff need training.
Brand Image
Customer service staff need
Products have required
training.
accreditations.
Processes and systems, etc
High degree of customer
Management cover insufficient.
satisfaction.

Opportunities
Threats
Profit margins will be good.
Vulnerable to reactive attack by
Could extend to overseas.
major competitors.
Could seek better supplier
Lack of infrastructure in rural
deals.
areas could constrain
An applied research centre to
investment.
create opportunities for
High volume/low cost market is
developing techniques to
intensely competitive.
provide added-value services
SWOT ANALYSIS
ROCHAK SAXENA B.COM HON. II YEAR

Bibliography

SL. NO. BOOKS

AUTHOR

1. Marketing Management PHILIP

KOTLER

2. Marketing Management Dr.PANDAY RASTOGI


ROCHAK SAXENA B.COM HON. II YEAR

91

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